Japan - October 2021

S P OT L I G H T
Savills Research

Nagoya Residential
Markets

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Nagoya Residential Markets

Demographic trends underpin the market
Summary• Nagoya’s residential market
is supported by stabledemographic trends.
• Although the pandemic has
halted rental growth, theadverse impact has been
relatively limited thus far.
• Net-migration became positive
after 2000, with the migrationfrom other parts of Aichi
increasing.
• Net-migration generally
increases during economic
upturns, although the outﬂ ow
to Greater Tokyo partially
off sets this.
• The quality of Aichi’s higher
education institutions helps toattract and retain young people,
which eventually translates
to a steady talent pool forcompanies in the area.
• Station-front neighbourhoods
have generally exhibitedstronger population growththan other submarkets in
Nagoya.
• The redevelopment projects
taking place across the city
will continue to enhance
Nagoya’s city infrastructure andattractiveness going forward.

into Nagoya from Greater Nagoya was about
6,800, much of this increment was oﬀset by
the outﬂow of about 5,000 people from the city
to Greater Tokyo and Greater Osaka.
Some areas in Nagoya have seen notably
stronger population growth than the city
average. For instance, between 2010 and 2020,
Naka ward and Higashi ward saw annual
growth rates of 1.6% and 1.3%, respectively,
compared to the city average of 0.3%.
Additionally, further granular analysis reveals
that population growth was particularly strong
in station-front neighbourhoods. Whilst
Nagoya is widely considered a “car society”
with a higher dependency on automobiles, thepopulation growth close to stations may signala paradigm shift in transportation.
Overall, this steady but mild growthof Nagoya’s population is reﬂected in its
residential leasing market. Over the past
ﬁve years, rents have grown a moderate 9%
while occupancy levels have remained around
94%, even during the pandemic. Consideringthat the supply of rental units has exceeded
net-migration in Nagoya in recent years, themarket momentum is unlikely to acceleratesoon. In the longer term, however, ongoingredevelopments across the city as well as theMaglev line project bode well for Nagoya’s
residential market.

INTRODUCTION
Greater Nagoya1 is the third largest
metropolitan area in Japan, and its regional
centre, Nagoya City (hereafter referred toas Nagoya), has a strong appeal that attracts
and retains people, primarily due to theemployment and education opportunities.
The immigration inﬂow from Greater Nagoya,particularly from people in their late 20s, isthe primary source of population growth in
Nagoya.
Just like the 23 wards in Tokyo, Nagoya
also saw positive net-migration after 2000.
Prior to that, the population outﬂow from
Nagoya to other parts of Aichi outweighed
the inﬂow from other areas. Over the past
three decades, however, Nagoya has seen
signiﬁcant improvements to its transportation
infrastructure and the redevelopment ofmany commercial areas (Map 2). Thesedevelopments have consequently contributed
to a gradual reversal of the large population
exodus between the late 1980s and early 1990s.
Nagoya’s population growth has since beenmodest, increasing at an average annual rateof 0.3% between 2010 and 2020. The relatively
slow growth is understandable as Nagoya iscompeting with two larger metropolitan areasthat sandwich the city from the east and west.
Indeed, in 2020, although the net-migration
1 In this report, Greater Nagoya refers to Aichi, Gifu, and Mie

MAP 1: Nagoya City

Moriyama
Nagoya Station

Kita

Nishi

HigashiChikusaNakamura

MeitouNaka
Showa
Nakagawa
AtsutaMizuhoTenpaku

MinatoMinami
Midori

Source Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

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Nagoya Residential Markets

MACRO DEMOGRAPHIC TRENDS
In 2020, despite the pandemic, Nagoya saw aslight increase of about 3,000 people, 0.1% of
its 2019 population 2 . Looking at the originsof these migrants, around 6,800 people
moved from the Greater Nagoya region into
Nagoya, making it the city’s main driver of
population growth. This trend is not new
as Greater Nagoya has been supporting
Nagoya’s population over the past few
decades. However, the signiﬁcant increasein migration from other cities in Aichi is amore recent change. Indeed, net-migrationfrom other parts of Aichi to Nagoya has been
positive since 2012 – a stark contrast withthe 1990s when the outﬂow from Nagoya toother cities in Aichi signiﬁcantly outweighed
its inﬂow.
A reasonable explanation for thisreversal is the substantial drop in land
prices in Nagoya after the bubble burst
in the early 1990s. Because of this, those
who were priced out of the city and sought
aﬀordable houses in other parts of Aichi
may have gradually returned to Nagoya.
Furthermore, as mentioned in the previous
section, this period corresponds to the timeof Nagoya’s major redevelopments and otherinfrastructural improvements. As such, theseadvancements to Nagoya’s infrastructure
seemed to have helped accelerate thepopulation reversal.
To get a better grasp of this growing
2 This ﬁgure is the sum of net migration to Nagoya. Since
this does not incorporate natural causes (births and deaths),
in addition to other differences in methodology, the ﬁgure
will not necessarily match the population change reported by
the city.

As a regional hub, Nagoya attracts
and retains people, which in turnsupports demand for the city’s
residential market. While thepopulation growth in Nagoya ismoderate, some submarkets haveexhibited stronger growth thanothers. Furthermore, ongoingredevelopment should further
enhance Nagoya’s attractiveness.

trend, a closer look at the migration patterns
within Aichi is important. Upon analysing
the migration trends by region, the Mikawa
region and the Chita Peninsula are the major
sources of population inﬂows into Nagoya,and that the 20-to-39-year-old age bracket
dominates the inﬂows. On the other hand,
while the Owari region also generated a net
positive migration to Nagoya within the
20-to-29-year-old age group, the outﬂows of
the 0-to-9-year-old and 30-to-39-year-old
groups oﬀset this.

MAP 2: Nagoya’s High-rise Towers* Built After 1989 and Train Track Extension

High-rise Towers (After 1989)
Commercial Buildings
Residential Buildings

Train Tracks
Before 1989
New/Extension

Source Nagoya Urban Institute, Savills Research & Consultancy**Here, high-rise towers are mostly buildings that are over 100 meters in height.

3This high-level observation indicatesthat there is a migration pattern within
Aichi corresponding to the life stages of its
residents. Speciﬁcally, workers who are in
relatively early stages of their career tend
to move to Nagoya from nearby cities in
Aichi for job opportunities. However, many
married couples in their 30s appear to moveout to more suburban areas in the Owari
region after having children. For instance,
Nagakute City in Owari Higashi is a popular
city for families and known for its low
average age of 38.6 years as opposed to thenational average of 46.4 years, according to
the 2015 national census.
Despite these outward trickles, the overall
net-migration from other parts of Aichi to
Nagoya has been positive and growing. As
discussed in later sections, the employment
and education opportunities of the city
are critical in attracting and retaining
young migrants. Furthermore, as theredevelopment in Nagoya progresses, people
should ﬁ nd living in the city more attractive,
particularly as residents of the city seem tobe reducing their dependence on cars.
Finally, although delayed, the Maglev
line, which plans to reduce the travel time
between Shinagawa and Nagoya from about
90 minutes to 40 minutes, could provide
a further boost to Nagoya’s long-term
growth. While Sakae is a centre of recent
developments, such as the opening of Odori
Rayard, and planned redevelopment projects
including the Chunichi Building, Sakae
Hiroba, and Nagoya Mitsukoshi Sakae, thecompletion of the Maglev line could further
gravitate interest towards Nagoya Station.

Nagoya Residential Markets

GRAPH 1: Nagoya City Migration Flows*, 2020

-4,617

20,42815,811

Greater
Tokyo

,9

97
,0

0

25

6

58,650

76
7

93

5

6,

92

Greater
Nagoya

,9

10
3,

26

77

3

Others18

Source Ministry of Internal Aff airs and Communications, Savills Research & Consultancy*The numbers in the chart include both Japanese and foreign population.

MAP 3: Aichi Subregions

Owari
Nishi

Owari Naka
Owari
HigashiOwari
Minami
NagoyaNishi Mikawa
Higashi Mikawa
Chita

Source Savills Research & Consultancy

EDUCATION
Higher education in Aichi serves as ananchor to retain its young population. The
prefecture boasts the third highest numberof universities in Japan, behind Tokyo andOsaka. Many of these universities are highly
ranked in the country, including Nagoya
University with ﬁve Nobel laureates amongits graduates. As such, the prefecture is
expected to remain the region’s educationhub.
About 65% of the Aichi university
population is made up of students originallyfrom the prefecture, according to the
Ministry of Education, Culture, Sports,
Science, and Technology. This demonstrates
the high propensity of students to remain in
Aichi. Speciﬁcally, in 2020, over 70% of Aichi
high school graduates that pursued higher
education chose to attend universities
in the prefecture. In fact, the number ofpeople that stay in Aichi after high school
graduation has increased by 6.7% between
2010 and 2020, while in the same period,
the total number of freshman students in
Aichi universities has also increased by 3.2%.
Gifu and Mie also provide a steady ﬂow ofuniversity students into Aichi, accounting
for about 50% of freshmen who come to Aichi
from outside of the prefecture.
More speciﬁc to Nagoya, the overall
number of students attending universities
within the city increased by 17% between
2010 and 2020 to 104,200 students. Thisis partially thanks to the abolishment of alaw that limited campus developments inurban areas in 2002, which paved the way
for universities to move their campuses
from other cities in Aichi to Nagoya. While
students originally from Aichi are lesslikely to directly increase residential leasing
demand since many of them can choose tocommute from their family homes, they stillplay a key part in adding vibrancy to the
local economy. Furthermore, this can leadto future leasing demand as many university
students in Aichi tend to ﬁnd jobs and stay in
Aichi after graduation3 .
As such, higher education is an important
foundation for the population of Aichi as
graduates will lead to eventual residential
leasing demand as they progress further
into their careers. Taken together, the stable
ﬂow of university students provides steadypotential for residential leasing demand, andthese graduates also provide a sound talentpool for employers in Nagoya.
EMPLOYMENTA major reason for new graduates to stayor come to Nagoya is its economic size andemployment base. Indeed, Nagoya is thecentre of Greater Nagoya’s economy, with
3 According to a survey of graduating university students by
Recruit, 65% to 70% of university students remained in Aichi
post-graduation over the past few years.

savills.co.jp/insight-and-opinion/

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Nagoya Residential Markets

GRAPH 2: Net-migration to Nagoya*, 1986 to 2020
Aichi

Greater Tokyo

Greater Nagoaya (excl. Aichi)

Other

Total

10,0005,000

PEOPLE0-5,000-10,000-15,000-20,000

Source Ministry of Internal Aff airs and Communications, Savills Research & Consultancy*The methodology for counting the foreign population has changed in 2012.
For consistency, this chart only includes the Japanese population.

GRAPH 3: Net-migration from Other Areas of Aichi to Nagoya by Geography andage*, 2020
0-9

10-19

20-29

30-39

40-49

50-59

Over 60

Higashi
MikawaChita

Owari Nishi

Owari
Minami

Owari
Higashi

Total

3,000

NET-MIGRATION TO NAGOYA

2,500
2,000
1,500
1,000
500
0
-500
-1,000Nishi
MikawaOwari Naka

Source Ministry of Internal Aff airs and Communications, Savills Research & Consultancy*The numbers in the chart include both Japanese and foreign population.

GRAPH 4: Trend of University Student Population in Nagoya, 2000 to 2020
110,000
105,000
100,000

STUDENTS

95,00090,00085,00080,00075,00070,00065,00060,000the city accounting for about 20% of theregion’s population in 2020 and 25% of its
GDP in FY2018. As of 2016, there were about
170 large-scale companies per one million
people in Nagoya, which was the third highest
concentration seen among major cities inJapan.
Aichi’s employment market in recent years
has been trending steadily. Unemployment
rates are typically lower than the national
average and the job-to-application ratios
were the second highest among the six
prefectures that contain major markets
that Savills monitors4 . Additionally, income
levels are high in Nagoya - the amountof taxable income per taxpayer has evenbeen consistently higher than other major
regional cities such as Osaka and Fukuoka.
Furthermore, the stable oﬃce market
conditions up until the pandemic reﬂect
the strong demand for companies to haveheadquarters and regional oﬃces in the city,
and also show that the employment base in
Nagoya is sound.
Among major companies in the region,
Toyota Motor Corporation in particular
has a signiﬁcant presence in the market.
Although the company is headquarteredoutside of Nagoya, many related companies
and suppliers located in the region havebusinesses with Toyota. As such, how well
Toyota can compete in the rapidly changing
automobile industry should have a strong
implication for Nagoya as well. Most recently,
Toyota has exhibited a strong recovery in
Q2/2021 with its operating proﬁt recording
a historic high. Furthermore, while Toyota
currently rather lags in the electric vehicle
scene, it has many investments into
innovations such as hydrogen, solid statebattery, and a connected city project, Woven
City, which may help the company’s future
growth.
Nevertheless, the overall pull force of
Nagoya’s job market does not seem as strongas Tokyo. Similar to Tokyo and Osaka,
Nagoya’s population tends to trend in tandemwith corporate proﬁt levels as more people
from other parts of Aichi and Greater Nagoya
move to Nagoya when economic conditions
are improving. However, it is also true thatnet-migration from Nagoya to Greater Tokyo
tends to increase when economy is growing(Graph 6). As a result of this opposing force
at play, population growth in Nagoya isrelatively subdued even during an economic
upturn. Additionally, the fact that major
companies in Aichi are located outsideof Nagoya and that many only indirectly
contribute to Nagoya’s residential demand
may be a weakness of the market.

Source Ministry of Education, Culture, Sports, Science, and Technology, Savills Research & Consultancy
4 Tokyo, Osaka, Aichi, Fukuoka, Miyagi, and Hokkaido

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Nagoya Residential Markets

GRAPH 5: Large-scale Companies per One Million People, 2016
500

LARGE-SCALE COMPANIESPER ONE MILLION POEPLE

450
400
350
300
250
200
150
100
50
0

Source Ministry of Internal Aff airs and Communications, Savills Research & Consultancy*Large-scale companies are deﬁ ned by the Small and Medium Enterprise Agency’s criteria set for different
industries. For instance, in the manufacturing industry, large-scale companies are the ones with more than
300 employees or the ones that are capitalised at more than 300 million yen.

GRAPH 6: Net-migration* to Nagoya vs Corporate Proﬁts, 2008 to 2020
Greater Tokyo

Other
120

10,000

100

8,000

80

6,000

60

4,000

40

2,000

20

0

0

-2,000-20-4,000-40-6,000-60

JPY TRILLION

NET-MIGRATION

Corporate Profits (1 year prior)(RHS)
12,000Source Ministry of Internal Aff airs and Communications, Ministry of Economy, Trade and Industry,
Savills Research & Consultancy*Only Japanese people.

GRAPH 7: Nagoya City Population as of June 2021 and CAGR* between 2010 and
2020

THOUSAND PEOPLE

Mar 2021 Population

CAGR (2010-2020) (RHS)

300

2.0%

250

1.5%

200

1.0%

150

0.5%

100

0.0%

50

-0.5%

0

-1.0%

Source Nagoya City, Savills Research & Consultancy*CAGR stands for compound annual growth rate.

savills.co.jp/insight-and-opinion/

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DEMOGRAPHIC TRENDS WITHINNAGOYA CITY
Nagoya’s population should grow steadily
going forward as the city serves as a lure
to attract and retain people, especiallywithin Greater Nagoya. However, reﬂectedin the mild demographic changes of thepast decade, there are limits to population
growth for the city as a whole. This shifts
our interest towards movements inside of
Nagoya. By analysing the city’s demographic
changes in greater detail, we see some areas
signiﬁcantly outperform others, and thus
expect further growth in these areas.
Speciﬁcally, looking at Graph 7, Naka ward
and Higashi ward saw annual population
growth rates of 1.6% and 1.3% between
2010 and 2020, respectively, compared tothe city average of 0.3%. Both wards have
convenient access to business districts andretail centres, which makes them attractive
especially for young professionals. Closer
analysis reveals that the neighbourhoods
close to stations with direct accessto Nagoya Station have experienced
particularly strong growth, with some seeing
population increases of over 20% between
2010 and 2020.
As for the sources of growth in thesewards, although Higashi ward saw positive
net-migration both from outside and insideof Nagoya, Naka ward lost its residents tothe other wards of the city. Considering thatNaka ward has a particularly low average
household size (Graph 8), it seems that theward is popular among single households,
and people tend to move to other wards as
the household size grows. Nakamura ward,
which like Naka ward is another central
ward with a low average household size, also
loses its residents to other wards in Nagoya.
In contrast, wards such as Minato ward,
Nakagawa ward, and Meitou ward showednegative net-migration in 2020. The former
two are located west of Nagoya Station andinclude large industrial areas that tend toturn away many people. However, the accessto the west side of Nagoya Station improved
with the completion of a new thoroughfare,
the Tsubakicho Line, that connects to the
Sasahima-raibu area. Additionally, the wholefacelift of Nagoya Station’s west exit plannedby 2027 may improve attractiveness of somestation-front neighbourhoods in Nakagawa.
NAGOYA RESIDENTIAL MARKET
While the pandemic has halted rental
growth in the Nagoya market, the averagerent in Q3/2021 remains 9% higher than thelowest level over the past ﬁve years. Despite
the ongoing pandemic, occupancy has been
trending upwards steadily and appears

Nagoya Residential Markets

GRAPH 8: People per Household, January 2021
Min - Max

Average

2.8

PEOPLE PER HOUSEHOLD

2.6
2.4
2.2
2
1.8
1.6
1.4
1.2

Source Nagoya City, Savills Research & Consultancy*Each bar represents average household sizes of neighbourhoods in the ward.

GRAPH 9: Net-migration to Nagoya Wards by Origin*, 2020
Owari

MikawaNagoya

Other

Total

1,500

NET-MIGRATION

1,000

500

0

-500

-1,000-1,500Source Ministry of Internal Aff airs and Communications, Savills Research & Consultancy*The numbers in the chart include both Japanese and foreign population.

GRAPH 10: Nagoya City Rents, 2016 to Q3/2021

2,500

2,300

2,200

Q3

Q1

Q2

Q3

2020

Q4

Q1

Q2

Q3

2019

Q4

Q1

Q2

Q3

2018

Q4

Q1

Q2

Q3

2017

Q4

Q1

Q2

Q3

2016

Q4

Q1

2,100
Q2

JPY/SQ M/MONTH

2,400

2021

Source Savills Research & Consultancy

7

to have helped steady rents. Additionally,
noticeable increases in demand for large
residential units have not been observed
during the pandemic, unlike Tokyo, which
is likely related to lower remote work
usage in regional cities. Going forward,
central areas and neighbourhoods close
to popular stations will likely continue tosee population growth and redevelopment,
which in turn should support residential
leasing demand.
That said, looking at supply and demand
dynamics, volumes of new rental units havebeen constantly outpacing net-migration
to Nagoya since 2012 (Graph 12), which
can partially explain soft growth in theresidential market thus far5 . Speciﬁcally,
the gaps between rental unit supply andnet-migration widened particularly between
2016 and 2018 when supply continued toincrease despite the slowing net-migration
trend.
Compared to Tokyo and Osaka, thetransaction volume of residential properties
is limited in Nagoya, representing about 5%
of Japan overall. However, more investors
may turn their eyes to regional cities like
Nagoya because Tokyo continues to see
a population outﬂow, while the capital’s
properties remain expensive. For example,
AXA Investment Managers acquired Royal
Parks ER Sasashima and D-room Share
Sasashima from Daiwa House Industryin June 2020 for approximately JPY20
billion and Aden Imaike East in July
2020. Additionally, in September 2020,
LaSalle Investment Management acquired
Residencia Izumi and Residencia Izumi II.
OUTLOOK
Nagoya’s residential market has seen
steady rental increases in recent years andhas exhibited resilience throughout the
pandemic thus far. Similar to Osaka, clear
changes in demographic trends like thoseobserved in Tokyo have not materialised,
and the city’s population has continued to
grow despite the economic slowdown.
As a regional hub, Nagoya provides asound employment base and education
opportunities that are particularly attractive
for people in Greater Nagoya. One of
the more noticeable changes in the past
decade is that net-migration from otherparts of Aichi to Nagoya turned positive,
a stark contrast to the bubble period whensigniﬁcantly more people left the city.
Redevelopments in the city centre and
5 The fact that housing starts are outpacing net-migration
does not necessarily mean oversupply since we also have totake existing stock and demolitions into account. Yet, if thegaps between these two metrics are widening, this could
indicate potential risk of oversupply in the future.

Nagoya Residential Markets

GRAPH 11: Nagoya City Occupancy, 2016 to Q3/2021
98%
97%
96%
95%
94%
93%
92%
91%

2017

2019

2020

Q2

Q3

Q1

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2018

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2016

Q2

Q3

Q4

Q1

Q2

90%

2021

Source J-REITs, Savills Research & Consultancy

GRAPH 12: Housing Starts of Rental Units vs Corporate Proﬁts, 2012 to 2020
Net-migration

Corporate profits (RHS)
90

16,00080

14,00070

12,00060

10,000

50

8,000

40

6,000

30

4,000

20

2,000

10

0

JPY TRILLIONPOEPLENew rental units
18,000transportation infrastructure improvements
over the past three decades have helped
bring back people to the city.
It should be noted, however, that Nagoya’s
population growth has been modest. This
seems partially due to its location as a city
situated between Greater Tokyo and Greater
Osaka. Nagoya has to compete with these
two larger metropolitan areas for people.
Indeed, while the overall net-migration
to Nagoya has increased as economic
conditions have improved over the past
decade, the population outﬂow from the city
to Greater Tokyo increased at the same time,
partially oﬀsetting population increases in
the city.
Within the city, however, some areas areseeing much stronger growth than overall
Nagoya. Neighbourhoods close to major
stations in particular have seen strong
population growth and the trend is likely tocontinue as redevelopments continue. Once
the Maglev Chuo Shinkansen starts running,
the Nagoya Station area is likely to gain
further popularity.
Overall, Nagoya’s fundamentals support
the residential leasing market. As investor
interest in the residential market remains
strong and prices stay elevated in Tokyo,
more investors may seek opportunities
in regional cities including Nagoya going
forward.

0
2012

2013

2014

2015

2016

2017

2018

2019

2020

Source Ministry of Land, Infrastructure, Transport and Tourism, Ministry of Economy, Trade and Industry,
Ministry of Internal Aff airs and Communications, Savills Research & Consultancy

For more information about this report, please contact us

Savills Japan

Savills Research

Christian Mancini
CEO, Asia Paciﬁc(Ex. Greater China)+81 3 6777 5150
cmancini@savills.co.jp

Tetsuya Kaneko
Managing Director, Head of
Research & Consultancy, Japan+81 3 6777 5192
tkaneko@savills.co.jp

Yoshihiro Kanno
Manager, Research &Consultancy, Japan+81 3 6777 5275
ykanno@savills.co.jp

Simon Smith
Regional Head of Research& Consultancy, Asia Paciﬁc+852 2842 4573
ssmith@savills.com.hk

Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offi ces and associates throughout the Americas, the UK,continental Europe, Asia Paciﬁc, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative
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